This is the 2nd post of 5 containing the transcript of a podcast hosted by Eric Weinstein interviewing Peter Thiel.
Nature and Culture
Eric Weinstein: Actually I'm scanning my memory and I don't know that we've had this conversation, so I'm curious to hear your answer. One of the things that I found surprising is that I think I can tell a reasonably decent story about how this is a result of a scientific problem rather than the mismanagement of our future. Do you believe that if we assume that there was this early 1970s structural change in the economy, that it was largely a sort of manmade problem? Which is what we seemingly implicitly always assume. Or, might it be a scientific one?
Eric Weinstein: And let me give you the one iconic example that really kind of drives it home for me. I think quarks were discovered in 1968. And to find out that the proton and neutron are comprised of up and down quarks is an incredible change in our picture of the world. Yet it has no seeming implications for industry. And I started thinking about this question: Are we somehow fenced out of whatever technologies are to come - that we sort of exhausted one orchard of low hanging fruit and haven't gotten to the next?
Peter Thiel: I think one way to parse this question of scientific, technological stagnation is sort of nature versus culture. Did the ideas in nature run out? Or, at least the useful ideas. Maybe we make some more discoveries, but they're not useful.
Eric Weinstein: Or the easily useful.
Peter Thiel: Easily useful. So it's a problem with nature. And then the cultural problem is that there was actually a lot to be discovered or a lot that could be made useful, but somehow the culture had gotten deranged. And I sort of go back and forth on those two explanations. I think it's very complicated. Yeah, I think in physics you'd say ... I mean, probably even the fundamental discoveries stopped after the mid 1970s, but certainly the translation didn't happen. Quarks don't matter for chemistry, and chemistry's what matters on a human level.
Peter Thiel: I would say there was a lot that happened in biochemistry. You know, not chemistry down, but sort of chemistry up; the interface between chemistry and biology. And that's where I would be inclined to say there's a lot more that could happen and has not quite happened, because maybe the problems are hard. But maybe also the cultural institutions for researching them are restrictive. It's too heavily regulated in certain ways and it's been just somewhat slower than one would have expected in the 1970s.
Eric Weinstein: So maybe it's really just a constant dialogue between nature and culture.
Peter Thiel: Yes, obviously. Because obviously, if nature has stopped, then the culture is going to derange. So there's a way in which culture is linked to nature. And then if the culture deranges, it also will look like nature stops. There are probably elements of both.
Peter Thiel: But I am always optimistic in the sense that I think we could have done better. I think we could do better. It's not necessarily the case that we can advance on all fronts in every direction, but I think there's more space on the frontier than just in this world of bits. So I think there are various dimensions on atoms where we could be advancing and we just have chosen not to.
Eric Weinstein: Why do you think it's so hard to convince people that ... Because both of us have had this experience where we sit down, let's say to an interview, and somebody talks about the dizzying pace of change. And both you and I see almost ... I mean, it's almost objectively true. I have this test, which is: go into a room and subtract off all of the screens.
Peter Thiel: Yes.
Eric Weinstein: How do you know you're not in 1973 but for issues of design? There aren't that many clues.
Peter Thiel: Yeah, there are all sorts of things one can point to. I mean I always point to the productivity data in economics, which aren't great. And then you get into debates on how accurately are those being measured. You have the sort of intergenerational thing where our generation, Gen X, has had a tougher time than the Boomers. The Millennials seem to be having a much tougher time than either us or the Boomers had. So there seems to be this generational thing. So there are some of these sort of macroeconomic variables that seem pretty off.
Peter Thiel: The direct scientific questions, I think, are very hard to get a handle on. And the reason for this is that in late modernity, which we are living in, there's simply too much knowledge for any individual human to understand all of it. And so in this world of extreme hyper specialization, where it's narrower and narrower subsets of experts policing themselves and talking about how great they are, the string theorists talking about how great string theory is, the cancer researchers talking about how they're just about to cure cancer, the quantum computer researchers are just about to build a quantum computer, there'll be a massive breakthrough. And then if you were to say that all these fields, not much is happening, people just don't have the authority for this. And this is somehow a very different feel for science or knowledge than you would've had in 1800 or even in 1900. In 1800, Goethe could still understand just about everything.
Eric Weinstein: Right.
Peter Thiel: 1900, Hilbert could still understand just about all of mathematics and so this sort of specialization, I think, has made it a much harder question to get a handle on. The political cut I have on the specialization is always that if you analyze the politics of science, the specializations should make you suspicious, because if it's gotten harder to evaluate what's going on, then it's presumably gotten easier for people to lie and to exaggerate, and then one should be a little bit suspicious. And that's sort of my starting bias.
Sanity of Institutions
Eric Weinstein: And mine as well. And I think perhaps sort of the craziest idea to come out of all of this - and again you met your version of this in a law firm, which is predicated upon the idea that a partner would hire associates and the associates would hope to become partners who could then hire associates. And so that has that pyramidal structure. And in the university system, every professor is trying to train graduate students to become research professors to train graduate students. And I think that the universities were probably the most aggressive of these things I've called embedded growth obligations. But the implication of this idea that we structured almost everything on an expectation of growth, and then this growth that was expected ran out - it wasn't as high and stable and as technologically-led as before - has a pretty surprising implication. Which is, I mean ... Well let's not dance around it. It feels like almost universally, all of our institutions are now pathological.
Peter Thiel: Or sociopathic, or whatever you want to call them. Yes. Yes, I suppose there's sort of two ways one could imagine going, if you had these expectations of great growth - Great Expectations was the Charles Dickens novel from the 19th century.
Eric Weinstein: Right.
Peter Thiel: We had Great Expectations. And then you can try to be honest and say the expectations are dialed down, or you can continue to say everything's great and it just happens not to be working out for you, but it's working out for people in general. And somehow it's been very hard to have the sort of honest reset. And the incentives have been for the institutions to derange and to lie. There's probably a way the universities could function if they did not grow. You’d be honest, most people in PhD programs don't become professors. Maybe you'd make the PhD programs much shorter. Maybe you'd be much more selective; you'd let fewer people in. There would be some way you could sort of adjust it, and the institutions could still be much healthier than they are today.
Peter Thiel: But that's not the path that seemingly was taken. And something like this could have been done in a law firm context. Maybe you still let the same percentage of people become partner, but the partners don't make quite as much money as before, or something like that. So that there would have been ways when one could've gone, but those are generally not the choices that were made.
Eric Weinstein: Yeah. I wonder if that's even possible. Because if you had a law firm that was honest or university that was fairly honest and you had one that was dishonest, it seems to me that the dishonest one could attempt to use its prestige to out compete the honest one. And so that would become a self-extinguishing strategy, unless you somehow have a truth-in-advertising program.
Peter Thiel: Yeah, I don't know. I do think the truth, when it breaks through, you're better off having told it than not not having. And so it's always ... As long as everybody was dishonest, it could work.
Peter Thiel: Look, it's mysterious to me how long it worked. We had these crazy bubble economies in the ... You know, we had the tech bubble in the 90s, the housing bubble in the 2000s, what I think is a government debt bubble this last decade. And so if you've had this sort of up-down bubble, that's sort of harder to see than if things were just flat. So if the growth in 1970, things had just flat-lined, and you had 40 years of no growth, that would have been problematic. And you might have noticed that very quickly.
Eric Weinstein: Right.
Peter Thiel: But in a sense, simplifying a lot, you could say the 70s were down, the 80s were up, the 90s were up, the 2000s were down. So two down, two up, net flat, but it didn't feel that way internally.
Eric Weinstein: With lots of excitement.
Peter Thiel: There was a lot of excitement, a lot of stuff happened. And California was like a even more extreme version of this. You know, the last know the last three recessions in California were much more severe than in the country, as a whole. The recoveries were steeper, and so California has felt incredibly volatile. The volatility gets interpreted as dynamism. And then before you know it, 30 or 40 years have passed.
Individual and Collective Incentives
Eric Weinstein: One thing that I'm very curious about is how this discipline seems to have arisen, where almost everyone representing the institutions tell some version of this universal story. Which, I'll be honest. To my way of thinking, can be instantly invalidated by anyone who chooses to do so. It's just that the cost of invalidating it is quite high. You know, Paul Krugman wrote this column called A Protectionist Moment, where he said, "Let's be honest. The financial elite's case, for ever free-er trade, has always been something of a scam.".
Eric Weinstein: And so you had people who were participating in this who seem to have known all along that there's no way of justifying this on paper, but yet were willing and able to participate with seemingly very few consequences to their careers. It didn't give opportunities to people who were heterodox and saying, "Hey, aside from a few bright spots, more or less, we've actually entered a period of relative stagnation." How did this happen?
Peter Thiel: Well, I think the individual incentives were very different from the collective incentive. The collective incentives, in which we have an honest conversation and level set things and get back to a better place. I think the individual incentives were often, you pretend that it's working great for you. The 20,000 people a year who move to Los Angeles to become movie stars, about 20 of them make it. And so you could say, "Well, it's been really hard. Nobody wants to hire me. This is a terrible city." Or you could say, "You know, this has been wonderful, and that all the doors are being opened to me." And the second one is more fictional. But that's sort of the thing you're supposed to say if you're succeeding. And I think there's a way this is how we've been talking about globalization, a weird sort of a glib globalization. It's working great for me, and I'd like to have more people, more talented people come to the US. I'm not scared of competing with them. And on and on.
Peter Thiel: Or academia. If you're a professor in academia, so the tenure system is great. It's just picking the most talented people. I don't think it's that hard at all. It's completely meritocratic. And if you don't say those things, well we know you're not the person to get tenure.
Peter Thiel: So I think there is sort of like this individual incentive where you're if you pretend the system is working, you're simultaneously signaling that you're one of the few people who should succeed in it.
Official and Unofficial Narratives
Eric Weinstein: I used the word kayfabe for the system of nonsense that undergirds professional wrestling, and you've taken to using LARPing, live action role playing. It strikes me that we have two separate parallel systems. Now, this podcasting experiment that you and I are now part of provides for a very unscripted, out of control narrative. And then there's this parallel institutional narrative that seems to exist in a gated form where the institutions keep talking to each other and ignore this thing that's happening that has reached more and more people, so that you effectively have multiple narratives. (One of which, I think almost no one needs to believe. It's just that the institutions need to trade lies and deceptions back and forth amongst themselves.) How is it that these two things can be kept separate? It's like a real wrestling league and a professional wrestling league, side by side, where somehow they just don't come into contact with each other.
Peter Thiel: Well, I think if they came into contact, then they wouldn't both be able to exist. So I think that's not surprising that they can't come to contact.
Peter Thiel: I don't think it's ultimately stable. So I think ultimately our account is going to prevail. The institutional account is so incorrect that it will ultimately fail. I've probably been more hopeful about how quickly truth prevails than than it has.
Eric Weinstein: It's taken forever.
Peter Thiel: But I would still be very hopeful that our account is really going to break through in the next few years. I've been talking about this, the tech stagnation problem for the better part of a decade. And I think when I was talking about this in 2008, 2009, 2010 this was still a fringy view. It was very fringy within Silicon Valley. And I think even within Silicon Valley, there's sort of a lot of people who've come around to it, who've partially come around to it. There's a sense that tech has a bad conscience. It feels like it's not delivering the promises. Google had this propaganda about the future and it's now seen as .... The self-driving cars are further away than people expected. And so I think there is sort of a sense that things have shifted a lot over the last decade.
Eric Weinstein: But even five years ago. I moved out to work with you in 2013, and I had never seen a boom before. I mean, this was one of the things that was really important to me, is that being an academic ... The academy had been in a depression since this change around 1972, '73. And seeing a boom and seeing people with flowers and dollar signs in their eyes, talking about a world of abundance and how everything was going to be great, it seemed like everybody was the CEO or CTO of some tiny company.
Eric Weinstein: And then very, very quickly, it all started to change, and I felt like a lot of people moved back into the behemoths from their little startup having failed. A lot of the ideology felt poisonous, like, "Don't be evil," was not even something you could utter without somebody snickering behind your back. There's a self-hating component, where the engineers have been recruited ideologically and are not actually there to do business.
Peter Thiel: Sure.
Eric Weinstein: How did this happen so quickly?
Eric Weinstein: Am I wrong about that?
Peter Thiel: No, it's striking how fast it's happened. It's striking how much it's happened in the context of a bull market. So if you describe this in terms of psychology, you'd think that people to be as angry in Silicon Valley as they are today, the stock market must be down 40% or 50%. It's like people in New York city were angry. In 2009, they were angry at the banks. They hated themselves. But the stock market was down 50%, 60%, the banks had gotten obliterated. And that sort of makes sense psychologically. And the strange thing is that in terms of sort of the macro economic indicators, the stock markets, the valuations of the larger companies, it's way beyond the .com peaks of 2000, in all in all sorts of ways. But the mood is not like late '99, early 2000. It has this very different mood.
Peter Thiel: And the way I would explain this is that, for the people involved, it is sort of a look ahead function. Yes, this is where things are, but are they going to be worth a lot more in five years, 10 years? And that's gotten a lot harder to tell.
Peter Thiel: And so there's been growth, but people are unhappy and frustrated because they don't see that much growth going forward, even within tech. Even within this world of bits, which had been very, very decoupled for such a long time.
Eric Weinstein: Now, one of the things that's interesting to me is, is that when we talk like this, a lot of people are gonna say, "Wow, that's a lot of gloom and doom. So much is changing so much is better." And yet, what I sense is that both you and I have an idea that we've lived our entire life in some sort of intellectual Truman Show, where everything is kind of fake, and something super exciting is about to happen. Do you share ... Is that a fair telling?
Peter Thiel: Well, I think there's been the potential to get back to the future for a long time. And there have been breaks in this Truman Show at various points. There was a big break with 9/11. There was a big break with the 2008 crash. You could say some sort of break with Brexit and Trump.
Peter Thiel: And the last few years, it's still a little bit undecided what that all means. But I think there were a lot of reasons to question this and reassess this for some time. The reassessments never quite happened, but I would say I think we're now at the point where this is really gonna happen in the next two years to five years to decade. I don't think the Truman Show can keep going that much longer.
Peter Thiel: And again, I've been wrong about this, so-
Eric Weinstein: Me, too.
Peter Thiel: I've been very wrong.
Eric Weinstein: I've been wrong. I've called it earlier.
Peter Thiel: We had an offsite when I was running PayPal in spring of 2001. The NASDAQ had gone from 2,000 to 5,000 back to 2,000, the .com bubble was over. And I was explaining, we were just battening down the hatches. At least one little company has survived, and we're going to survive. But the sort of insanity that we saw in the .com years will never come back in the lifetimes of the people here, because psychologically, you can't go that crazy again while you're still alive.
Eric Weinstein: Right.
Peter Thiel: The 1920s didn't come back until maybe the 1980s, or something.
Eric Weinstein: The lessons of the depression were long lived.
Peter Thiel: So it was generationally over. And yet, already in 2001, we had the incipient housing bubble, and somehow some other shows kept going for 20 years, 25 years.
Eric Weinstein: With a crazy narrative. The whole narrative behind the Great Moderation. I mean, I remember just clutching my head, "How can you tell a story that we've banished volatility?".
Peter Thiel: Yes. I always think of the 1990s narrative was the new economy, and you lied about growth. And then the 2000s narrative was the Great Moderation, and you lied about volatility. And maybe the 2010s one is secular stagnation, where you lie about the real interest rates, because the other two don't work anymore. In sort of a complicated way, these things connect.
Peter Thiel: But yes, new economy sounded very bullish in the '90s. Great Moderation was still a reasonably long stocks, but sounds less bullish. And then secular stagnation - in the Larry Summers forms, to be specific to what we're talking about - means again, that you should be long the stock market. The stock market's going to keep going up because things are so stagnant. The real rates will stay low forever.
Peter Thiel: So they are equally bullish narratives, although they sound less bullish over time.
Eric Weinstein: So that effectively we need ... What happened with the Roaring '20s followed by the depression was that there was a general skepticism, and here the skepticism seems to be specific to something different in each incarnation. You keep having bubbles with some lie you have yet to tell.
Peter Thiel: And of course, I think the crazy cut on the '20s and '30s was that we didn't need to have as big of a crash. You could've probably done all sorts of interventions. Because the 1930s was still a period that was very healthy in terms of background scientific, technological innovation. If we just rattle off what was discovered in the 1930s that had real world practical things, it was: the aviation industry got off the ground, the talkies, the movies got going. You had the plastics industry, you had secondary oil recovery, household appliances got developed. And as you know, by 1939 there were three times as many people who had cars in the US as in 1929. There was this crazy tailwind of scientific and technological progress that then somehow got badly mismanaged, financially, by whoever you blame the crash on.
Peter Thiel: And so, I think that's what actually happened in the '30s, and then we tried to manage all these financial indicators much more precisely in recent decades, even though the tailwind wasn't there at all.
Physics, Biology, and Polymaths
Eric Weinstein: So, let me focus you on two subjects that are important for trying to figure out the economy going forward. I'm very fond of perhaps over-claiming, but making a strong claim for physics. That physics gave us atomic devices and nuclear power, and it ended World War II definitively. It gave us the semiconductor, the worldwide web, theoretical physicists invented molecular biology, the communications revolution. All of these things came out of physics, and you could make the argument that physics has been really underrated as powering the world economy.
Eric Weinstein: On the other hand, it's very strange to me that we had the three-dimensional structure of DNA in '53, we had the genetic code 10 years later, and we've had very little in the way of, let's say, gene therapy to show for all of our newfound knowledge. Now, I have no doubt that we are learning all sorts of new things - to your point about specialization - in biology, but the translation hasn't been anything like what I would have imagined for physics.
Eric Weinstein: So, it feels like somehow we're in a new orchard, and we're spending a lot of time exploring it, but we haven't found the low hanging fruit in biology, and we've kind of exhausted the physics orchard, because what we've found is so exotic that, you know, whether it's two black holes colliding, or a third generation of matter, or quark substructure, we haven't been able to use these things. Are we somehow between revolutions?
Peter Thiel: Well, I'd be pessimistic on physics generally, so that sort of be my bias on that one.
Eric Weinstein: Me as well.
Peter Thiel: Biology, I continue to think we could be doing a lot more, we could be making a lot more progress. And you know, the pessimistic version is that no, biology is just, is much harder than physics, and therefore it's been slower going.
Peter Thiel: The more optimistic one is that the culture is just broken. We've had very talented people go into physics. You go into biology if you're less talented. You can sort of think of it in Darwinian terms. You can think of biology as a selection for people with bad math genes. You know, if you're good at math, go to math, or physics, or at least chemistry, and biology we sort of selected for all of these people who are somewhat less talented. So, that might be a cultural explanation for why it's been been slower progress.
Eric Weinstein: But, I mean, we had people from physics, we had, like, Teller, and, Feynman, and Crick. There's no shortage of, to my earlier point, molecular biology, anyway, was really founded by physicists more than any other thing, I think. Why is it that in an era where physics is stagnating, we don't see these kinds of minds? Like, I'm a little skeptical of that theory.
Peter Thiel: Well, I'm not so sure. Like, if you're a string theory person, or even sort of an applied experimental physicist, I don't think you can that easily reboot into biology. I mean, these disciplines have gotten sort of more rigid. It's pretty hard to transfer from one area to another.
Peter Thiel: You know, when I was an undergraduate, you still had some older professors who were polymaths, who knew a lot about a lot of different things. This is, I think, the way one should really think of, you know, Watson and Crick, or Feynman, or Teller. They were certainly world-class in their field, but also like incredible in a lot of different fields.
Eric Weinstein: They were highly transgressive.
Peter Thiel: And, you know, the cultural, or institutional, rule, is no polymaths allowed.
Eric Weinstein: Wow.
Peter Thiel: You know, you can be narrowly specialized, and if you're interested in other things you better keep it to yourself and not tell people, because if you say that you're interested in computer science and also music, or studying the Hebrew Bible, wow, that's just, that must mean you're just not very serious about computer science.
Polymaths in Universities
Eric Weinstein: Well, so I totally want to riff on on this point, because I think you've hit the nail on the head. To my way of thinking, the key problem is, if you go back to our original contention, which is, is that there is something universally pathological about the stories that every institution predicated on growth has to tell about itself when things are not growing.
Eric Weinstein: The biggest danger is that somebody smart inside of the institution will start questioning things and speaking openly.
Peter Thiel: The polymaths would be the people who could connect the dots and say, you know, there's not that much going on in my department, and there's not much going on this department over here, and not that much going on in this department over there, and those people are very, very dangerous.
Peter Thiel: You know, one of my friends studied physics at Stanford in the late '90s. His advisor was this professor at Stanford, Bob Laughlin, who, you know, brilliant physics guy, late '90s he gets a Nobel prize in physics, and he suffers from the supreme delusion that now that he has a Nobel prize he has total academic freedom and he can do anything he wants to. And he decided to direct it at, you know, I mean, there are all these areas you probably shouldn't go into, you probably shouldn't question, climate science, there are all these things when one should be careful about, but he went into an area of far more dangerous than all of those.
Peter Thiel: He was convinced that there were all these people in the university who were doing fake science, who were wasting government money on fake research that was not really going anywhere, and he started by investigating other departments, started with the biology department at Stanford university. And you can imagine this ended catastrophically for Professor Laughlin, you know, his graduate students couldn't get PhDs. He no longer got funding, Nobel prize in physics, no protection whatsoever.
Eric Weinstein: Julian Schwinger fell out of favor with the physics community despite being held in its highest regard and having a Nobel prize, and he used the epigram in a book where he wanted to redo quantum field theory around something he called source theory, he said, "If you can't join them, beat them." And I think it comes as a shock to all of these people that there is no level you can rise to in the field that allows you to question the assumptions of that field.
Peter Thiel: Right. It's like, you know, you're sort of proving yourself, you're getting your PhD, you're getting your tenured position, and then at some point you think, you would think that you've proven yourself and you can talk about the whole and not just the parts, but you're never allowed to talk about more than the parts.
Peter Thiel: You know, like the person in the university context, or the class of people who are supposed to talk about the whole, I would say, are university presidents, because they are presiding over the whole of the university and they should be able to speak to what the nature of the whole is, what sort of progress the whole is making. What is the health of the progress of the whole? And, you know, we certainly do not pick university presidents who think critically about these questions at all.
Eric Weinstein: Well, I remember discussing, with a president of a very highly regarded university, he came to me, he said, "Can you explain how your friend Peter Thiel thinks? Because I just had a conversation with him, and I could not convince him that the universities were doing fantastically, and this university in particular, like how does he come to his conclusion?".
Eric Weinstein: And I said, "Well look, Peter doesn't come, you know, with a PhD, but let me speak to you in your own language," and I started going department by department talking about the problems of stagnation. It was very clear that there was no previous experience with any kind of informed person making such an argument. I mean this was a zero day exploit.
Peter Thiel: But it's all, yeah, but in some sense, if you're a president of a university, you probably don't want to talk to people that dangerous. You want to avoid them, and you don't want to have such disruptive thoughts because you have to convince the government, or alumni, or whoever, to keep donating money, that everything's wonderful and great.
Peter Thiel: And I think one has to go back quite a long time to even identify any university presidents in the United States who said things that were distinctive, or interesting, or powerful. You know, there was Larry Summers at Harvard a decade and a half ago, and tried to do like the most minuscule critiques imaginable, and got crucified. But, you know, I don't think of Summers as a particularly revolutionary thinker.
Eric Weinstein: Well, he was possessed of an idea that the intellectual elite, in which he undoubtedly saw himself a part of, had the right to transgress boundaries. And I think what's stunning about this is the extent to which this breed of outspoken, disruptive intellectual has no place left inside of this system from which to speak.
Peter Thiel: But it's not that surprising. In a healthy system you could have wild dissent and it's not threatening because everyone knows the system is healthy. In an unhealthy system, the dissent becomes much more dangerous.
Peter Thiel: I think that's not that surprising. There's always one riff I have on this is always, if you think of a left wing person as someone who's critical of the structures of our society, there's a sense in which we have almost no left wing professors left.
Eric Weinstein: That's right. Like Noam Chomsky is still there as sort of a last remnant of some clade that no longer exists.
Peter Thiel: Left-wing in the sense of, let's say, just being critical of the institutions they're a part of.
Eric Weinstein: Right.
Peter Thiel: And there may be some that are much older, so if you're maybe in your eighties we can pretend to ignore you, or you know, this is just what happens to people in their eighties. But I don't see younger professors in their, let's say, forties, who are deeply critical of the university structure. I think it's just not, you know, you can't have that.